Sam Bankman-Fried’s FTX and Alameda Merge Their VC Operations

Crypto exchange absorbed the venture capital operations of Alameda Research, an effort to consolidate parts of billionaire Sam Bankman-Fried’s empire as it copes with a prolonged decline in cryptocurrency prices.

Alameda Chief Executive Officer Caroline Ellison outlined the change, which hasn’t been previously reported, in an interview with Bloomberg. The move took place before Ellison’s co-CEO, Sam Trabucco, said this week that he was stepping down and would move into an advisory role

Brian Lee, formerly a partner at Alameda Research Ventures, now works at FTX Ventures, the startup investment arm of the crypto exchange.

While the implications were small for Alameda’s staffing, they are significant for the crypto startup industry. Alameda was a prolific investor that backed more than 150 private companies, according to research from PitchBook. Its portfolio includes the nonfungible token marketplace Magic Eden and crypto bank Anchorage Digital.

Read more: Magic Eden’s valuation surges

The transition began in January, when FTX Ventures raised $2 billion, said Amy Wu, who runs the fund. No money changed hands between FTX and Alameda, she said. Venture investing is now completely concentrated under FTX Ventures. The crypto exchange, the venture arm and Alameda are all independent from one another, Wu said. “All three are operating completely as separate entities.”

Sam Bankman-Fried, who is the founder and CEO of FTX, is listed as one of six “investors” in FTX Ventures, along with Wu, Lee, Adam Jin and Ramnik Arora, according to its website. Arora leads product at FTX. 

Alameda will focus mainly on exchange and over-the-counter trading and decentralized finance, Ellison said. The agreement to move its venture capital unit to FTX isn’t meant to signal a closer relationship between the two companies, she said. “We’re arm’s length and don’t get any different treatment from other market makers,” she said. “The Alameda team isn’t working too much on the venture side day-to-day.”

The two companies, FTX and Alameda, have worked together on deals at times in the past. Alameda offered Voyager Digital LLC, a crypto lender and trading platform, a $485 million loan in June, but the lifeline wasn’t enough to stave off a liquidity crisis and bankruptcy. Alameda and FTX made a joint cash offer to purchase all of Voyager’s digital assets and loans, but Voyager called the offer a “low-ball bid” that disrupted the bankruptcy process.

Ellison said Alameda is open to doing similar bailouts as the crypto winter rages on. “The more systemically important someone is, the more important it would be to try to support them,” she said.

The move to FTX shouldn’t be too disruptive for Lee, the former Alameda venture capitalist. Both companies are located on the same corporate campus in the Bahamas.